Tennessee education savings account plan to cost $125M


Tennessee Gov. Bill Lee (AP Photo/Mark Humphrey)

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NASHVILLE, Tenn. — Gov. Bill Lee’s school voucher plan is expected to cost $125 million spread over five years, based on details released Thursday, a significant jump from what the Republican had said earlier this month.

The new price tag for Lee’s highly-anticipated school choice initiative, which would let more parents use state funds to pay for their children’s private education, was released by the governor’s office.

According to a draft of the bill, parents of students in certain low-income school districts could receive $7,300 in state funds for education savings accounts to pay for approved expenses. Families must be Tennessee residents with incomes below the federal poverty threshold to qualify for an eligible for free or reduced-price lunch.

Enrollment would be limited to 5,000 students in school year 2021-2022. The cap would increase by 2,500 students if the enrollment maximum is met in the following year and 10,000 students during the third year.

However, the plan’s total cost has remained unclear. And based on the numbers released Thursday, the total appears to have the potential to exceed $125 million.

During Lee’s first State of the State address to lawmakers, the governor said the program could cost at least $25 million as an “investment” for the first year of implementation, but officials have since said that number could be expanded to $125 million over the next five years depending on student participation.

This would allow $25 million per year for the voucher program. Yet if 5,000 students enroll during the first year — the maximum amount stated in the bill — that would cost $36.5 million to give each one $7,300.

Lee officials argue they don’t expect the program to hit that cap initially, but the governor is ready to commit more state money should enrollment exceed projections.

Education savings accounts are the latest offshoot of traditional school voucher programs after previous proposals stalled in the Republican-dominated Statehouse because of skeptical lawmakers uneasy about possibly taking away funding from public schools.

A large concern has been avoiding potential fraud and waste of families using the savings accounts for non-approved expenses. Lee’s response to that is to suspend or terminate schools that fail to properly comply with the program, as well as suspend or terminate participating students if the Department of Education finds that their families abuse the savings accounts.

Currently, five states allow some sort of ESA: Arizona, Florida, Mississippi, Tennessee and North Carolina. The Nevada Supreme Court struck down its state’s law after ruling that the funding mechanism was unconstitutional.

In Tennessee, the existing program is fairly small. Parents of students with certain disabilities can withdraw their children from public school and then receive up to $6,000 to pay for private educational services.

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